Unlucky 13: ECs which made loss during 5-year MOP

Their profits however soared by up to almost 60% upon privatization.

Executive condominiums (ECs) are a sure-win investments but only after the initial five-year minimum occupation period (MOP), and even more so when they are fully privatized 10 years after purchase.

Based on the study of property consulting firm Orange Tee, the price of an EC tends to ‘catch up’ with a private condominium only after 5 year and 10 year mark. As shown in the previous week’s issue of Singapore Business Review, 10 of the most profitable ECs after privatization have gains ranging from 49% to as high as 166%. The five-year MOP however was a challenge, with some projects making a loss.

Currently, OrangeTee notes that there are 21 EC developments in Singapore that are over 10 years old and have been privatised. 13 of them however made a loss after MOP completion, and the remaining 8 projects managed gains of over 20%.

According to Celine Chan, research analyst at OrangeTee, market timing was the main differentiating factor between the ‘losers’ and ‘winners’. The 13 projects that sold at a loss at MOP, she said, were launched during 1996 to 1999, just before the Asian Financial Crisis, when property prices were at their peaks.
“Projects which were launched during 2001 to 2005 - a period of sluggish growth, managed to achieve returns of at least 25% at MOP. These projects benefited from the subsequent upturn of the Singapore property market,” she explained.